House Passes Senate Health Care Bill and Reconciliation Bill That Will Transform Student Lending

For details on the student aid reform bill, see earlier post here. 

From the Chronicle of Higher Education: 

"The U.S. House of Representatives approved legislation late Sunday that would expand health-insurance coverage for Americans and end the bank-based system of distributing federally subsidized student loans.

The bill, HR 4872, approved on a vote of 220 to 211, was controversial nationwide largely because of its health-care provisions. Yet its passage by the House, and expected approval within the next few days by the Senate, will also close two decades of debate over whether colleges, students, and taxpayers are well-served by the inclusion of private lenders in the federal student-loan system."

From Reuters:

"Under the legislation, federal subsidies to private student loan lenders would stop and the government's role in lending would increase -- creating billions of dollars in projected savings that would go largely in grants to needy students.

The measure, opposed by private lenders and critics of an expanding federal government, was included in a package of proposed changes to an overhaul of the U.S. healthcare system.

The House passed the package after giving final approval to the healthcare bill that is ready for Obama to sign into law.

The package of changes now goes to the Democratic-led Senate for needed concurrence. A vote is expected this week."

At least one congressman with a Sallie Mae facility in his district voted in favor of student loan reform (from WJHG): 

"A student loan overhaul is now lumped into the health care reform package. That would make the federal government the sole issuer of student loans, putting 700 local Sallie Mae jobs at risk.

Boyd [Rep. Allen Boyd (FL)], who rallied with local employees back in November, says he is working hard to make sure those jobs aren't lost.

"I know that the student loan program will continue, it'll have to. There will be lots of folks involved with that, doing servicing work and other things," claimed Boyd."

Don Marron, a former member of the President’s Council of Economic Advisers (CEA), Acting Director of the Congressional Budget Office (CBO), and Executive Director of Congress’s Joint Economic Committee (JEC) from 2002-09 had this to say about claims of a "government takeover" of student loans in this bill (from Seeking Alpha):

"Opponents have denounced this change as a government takeover of the student loan market. That makes for a great soundbite, but overlooks one key fact: the federal government took over this part of the student loan business a long time ago.

In a private lending market, you would expect lenders to make decisions about whom to lend to and what interest rates to charge. And in return, you would expect those lenders to bear the risks of borrowers defaulting. None of that happens in the market for guaranteed student loans. Instead, the federal government establishes who can qualify for these loans, what interest rates they will pay, and what interest rates the lenders will receive. And the government guarantees the lenders against almost all default risks.

In short, the government already controls all of the most important aspects of this part of the student loan business. The legislation just takes this a step further and cuts back on the role of private firms in the origination of these loans."

The Washington Post reported on opposition to the bill that stemmed from savings being diverted to the health care side of the ledger:

"House Republicans and lending industry lobbyists oppose the measure, calling it an unnecessary government takeover and envisioning a bumbling bureaucracy replacing efficient private-sector loan operations.

"Instead of making student loans more affordable or preserving choice, competition and innovation in the loan program, Democrats are taking money from struggling students' pockets to help pay for a government takeover of health care," said Rep. Brett Guthrie (Ky.), senior Republican on the House subcommittee that oversees higher education."

Meanwhile America's Student Loan Providers, which represents lenders in the federal loan program, put out this statement this evening:

"This is not the final chapter. The Senate now has the historic opportunity to pass health reform -- without eliminating thousands of jobs and critical student services.  It is not too late for the Senate to adopt the alternative community proposal, which would generate billions for Pell Grants without causing massive job losses or service deterioration."

So, where do we go from here?  The reconciliation bill now goes to the Senate, which allows for 20 hours of debate and unlimited amendments to be proposed (which Senate Repulblicans have threatened to do) and then there is the issue of the Senate parliamentarian.  Stay tuned...

Comments

[dental health services]

this part of blog "The measure, opposed by private lenders and critics of an expanding federal government, was included in a package of proposed changes to an overhaul of the U.S. healthcare system." was very interesting, thank you!